500,000*0.05 = 25,000
With no increase in profits and no earnings on the investment, this leads to 250,000 after 10 years. How can it lead to less than 150,000 after 10 years when neither increased profits nor interest are included?
Add the increased profits: We've exceeded 150,000 by year 5.
Add investment earnings: We're right up against 150,000 by year 4.
I think we must conclude that the answer is very bad or the problem statement is very bad. Based on the evidence below, my first impression is the problem statement.
1) "invest 5% of its present profits"
2) "change its investment to 5% of the present profits"
That doesn't look like a "change" to me. Something fishy here.
Show your work and perhaps we can get a clue what it wants.